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12/18/2013

Will Bitcoin prices plummet?: China bans new Bitcoin deposits, what countries are next?

With about 1/3rd of Bitcoin worldwide transactions taking place in China, a Chinese ban could dramatically reduce the demand for the coins. However, this action just underscores how risky these coins are since other countries could move forward to banning them. From the Financial Times:

The head of BTCChina, the world’s largest Bitcoin exchange by trading volume, said he had received word at midday on Wednesday that his platform would no longer be able to accept renminbi from would-be Bitcoin buyers.

“As of right now, we have received notice from our third-party payment company that they will disallow customers from making deposits into our exchange,” Bobby Lee, a former Yahoo developer who co-founded BTCChina this year, told the Financial Times.

As of early afternoon the Bitcoin price in China had fallen more than 25 per cent on the day to Rmb2,800 ($461) per unit. It has been a rollercoaster ride for the virtual currency, which soared as high as Rmb7395 per unit in early December, up some 50-fold since the start of the year. . . .

1 Comments:

Bitcoin is undergoing a proving stage. It must be demonstrated that various responses to it from different governments do not represent a threat to it. Bitcoin prices may strengthen if it becomes obvious people can trade regardless of what their governments say about it. So this case ultimately comes down to how many Chinese are comfortable with a slower 'illegal' market. There are already a lot of them sort of stuck in Bitcoin because the legal channels just shut down, so they will start trying to learn how to trade in them since they can't just cash out. As the network of Bitcoin users figures out to route around state obstacles, the price is likely to rise.